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A Musician & Producer’s Guide to Filing Taxes

by
Philip Rudy
January 5, 2020 • 6 min read

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Tax season is here again, and if you’re self-employed or receiving 1099s as a reminder, you likely are going to be owing some of your income to good ole Uncle Sam.

There was a time when filing as a part-musician was overwhelming. In our current gig economy, tax software like TurboTax or H&R Block make this pretty painless — and even have free options for filing depending on the complexity of your return.

Simple Steps For Musicians To File Taxes

Musicians & Producers Have Unique Tax Deductions Available

Your studio desk, that new MIDI you purchased, and studio rentals can be factored into deductions.

What Can You Deduct

Basic business expenses like music software, or utilities required for studio space can typically be deducted from your income tax liability.

On top of that, part of being a musician involves a significant amount or travel costs and other miscellaneous expenses, like purchasing tickets. Yes, tickets to attend a music convention or concert, which is otherwise entertaining, can be treated as a business expense if the objective is to advance your career. Ah, the joys of being a Musician :).

What About Partial Deductions?

The instruments that you use to perform or record are essential assets that are essential for your career. Depending on the classification of which instrument you are using, you may not be able to fully deduct the instrument as an expense, but can you partially deduct the value over time through depreciation.

A digital instrument, however, can be treated as licensed software expense. If you are a user of Splice, for instance, depreciation wouldn’t apply and you can treat it is a basic business expense.

Current Tax Brackets to Be Aware Of

Income tax varies per state and sometimes per city. Ensure you factor in state (and potentially city) taxes on top of federal income tax.

See where your tax liability is based on marital or household status below. These brackets are sourced directly from the IRS and are for the earnings you had in 2019 to be paid in 2020 by April 15th.

Tax rate

Single Filers

Married filing jointly

Married Filing Separately

Head of Household

10%

$0 – $9,700

$0 – $19,400

$0 – $9,700

$0 – $13,850

12%

$9,701 – $39,475

$19,401 – $78,950

$9,701 – $39,475

$13,851 – $52,850

22%

$39,476 – $84,200

$78,951 – $168,400

$39,476 – $84,200

$52,851 – $84,200

24%

$84,201 – $160,725

$168,401 – $321,450

$84,201 – $160,725

$84,201 – $160,700

32%

$160,726 – $204,100

$321,451 – $408,200

$160,726 – $204,100

$160,701 – $204,100

35%

$204,101 – $510,300

$408,201 – $612,350

$204,101 – $306,750

$204,101 – $510,300

37%

$510,301 or more

$612,351 or more

$306,751 or more

$510,301 or more

Make It Easy On Yourself, And Use Tax Software

A self-employed audio engineer no longer needs to dread filling out complicated tax forms by hand. Filing taxes in the past was a huge chore and tedious process for the freelance music producer.

Today, completing tax forms is a simple and convenient process when a business owner uses Turbo Tax software. Whether the person makes a living as a music producer or an audio engineer, tax preparation software relieves stress and saves time throughout the year.

Self-Employed Music Producers Can Have Complicated Tax Returns

Entrepreneurs new to the music industry may have fears about filing taxes. In the past, these same individuals were most likely employed at other companies. Employees do not need to fret about deducting their own income taxes, Social Security and Medicare taxes from their paychecks. On the other hand, a self-employed individual no longer relies on another company for withholding required taxes. Paying income tax, Social Security tax and Medicare tax is now the sole responsibility of a self-employed freelancer.

Self-employment means new responsibilities.

Entrepreneurs need to pay their own self-employment taxes.

Turbo Tax software makes tax filing an easy process.

Eliminate the Former Necessity of Filling Out Tax Forms

Instead of filling out complex tax forms, Turbo Tax software asks the tax filer questions about income, expenses, and deductions. The professional tax preparation software then completes the forms. After filing taxes for the first time with the help of a reliable software program, a self-employed audio engineer or music producer is amazed at the quick and accurate calculations. Instead of trying to master mathematical feats designed to confuse the best of intellects, self-employed audio engineers can relax and let professional software perform the hard work.

Excellent Tax Software is Programmed to Grasp All Tax Issues

Of course, some software programs are better than others, so it is important to choose the right program. One way to tell if tax software has the capability of comprehending a person’s particular situation is whether the program has the ability to calculate complicated tax forms. Income tax programs are not all created equal. The best software tackles issues such as how to calculate sound equipment and other related expenses. Excellent software eliminates the need to hire a tax accountant because the program basically accomplishes similar results.

Approaching a Music Production Career as a Business

Although it is difficult to know if a new business as an audio engineer is going to yield promising results, it is a good idea to approach self-employment as a business rather than a hobby. A career is not a hobby. A musical hobbyist can only deduct limited expenses. Deducting expenditures is important for music producers because ordinary and necessary expenses constitute potential deductions. The Internal Revenue Service (IRS) poses nine crucial questions to people who are trying to decide if they have hobbies or new careers. One key question is whether the person is engaged in the activity in a businesslike fashion with serious goals to make profits.

Develop a Business Attitude from the Very Beginning of a Career

Besides the tax advantages of regarding freelancing as a business rather than a hobby, attitude makes a difference in achieving success. While it is challenging to venture out into the formerly unknown business world as an independent music producer or audio engineer, it is important to have a positive self-image. At first, family members and friends may mock and criticize. People formerly acknowledged for their encouraging remarks suddenly make discouraging comments. Good acquaintances may vocalize their negative feelings about people who try to earn their bread without working for others.

Pay Quarterly Estimated Taxes with Tax Preparation Software

Another advantage of using Turbo Tax software is that a music producer can eliminate additional stress by setting up an automatic schedule to pay quarterly taxes. While every person is not going to have enough earnings to warrant mandated quarterly estimated taxes, others may achieve astounding success rates.

Audio engineers who used to work at companies did not need to worry about paying quarterly estimated taxes because the money was automatically deducted from their earnings. A self-employed person who exceeds a certain amount of income must pay estimated taxes on a regular basis or risk having to pay a large penalty fee.

Another benefit of using a good software program is that the software performs all the calculations for the tax filer.

Filing Required Tax Schedules for the Seriously Astute Music Producer

For the self-employed audio engineer who is wise enough to take advantage of using reliable tax preparation software, life happens every day in a better way. A freelancer needs to list 1099-MISC forms on Schedule C and self-employment tax covering Social Security and Medicare taxes on Schedule SE.

Instead of hassling with how to fill out forms created by sophisticated accountants for their personal enjoyment, self-employed individuals should rely on tax software to fill out the monotonous forms. When a person uses excellent tax preparation software, it is easy to keep track of business expenses, freelance earnings and self-employment tax.

Important Tax Forms to Remember:

Miscellaneous Income Form (1099-MISC)

Schedule C Profit and Loss From Business

Schedule SE Self-Employment Tax

Taking a Home Office Deduction has its Fair Share of Pros and Cons

At first glance, the prospect of deducting home office expenses on Form 8829 is exciting. The Internal Revenue Service has certain qualifying rules to determine if a taxpayer has the right to take these deductions.

It is beneficial to visit the official Internal Revenue Service website for more detailed information. Although taking home office expense deductions means paying fewer taxes now, the decision has a downside. Claiming extra deductions equals less Social Security income down the road when a person is ready to retire.

One Final Concern – Pay Fewer Taxes Today or Receive More Social Security Income Later

Some entrepreneurs and freelancers who are eligible to deduct home office expenses prefer to pay extra taxes now so they can reap more Social Security earnings every month when they finally settle down to retire. Speaking about benefits, freelance music producers and audio engineers can decide to continue working past retirement age and receive even more

Social Security income. Besides, self-employed individuals never need to retire. Perhaps avoiding retirement at any age is a good way to live a long and prosperous life. For the creative music producer, longevity and TurboTax simplicity add up to an exciting lifestyle.

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Musician Taxes Made Easy (File Quickly)

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